Economics, Econometrics and Finance
4 years ago

Banks actively adjust interest rate risk exposure based on customer preferences.

SSRN Electronic Journal
What Drives the Short-Term Fluctuations of Banks' Exposure to Interest Rate Risk?
Christoph Memmel

Paper Summary

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2 views

Banks in Germany actively manage their exposure to interest rate risk in the short term by adjusting their risk levels based on regulations and earning opportunities. The fixed-interest period of housing loans is mainly determined by customers' preferences, impacting banks' overall exposure to interest rate risk. This contradicts the idea of active interest rate risk management.